Six Puzzles in Electronic Money and Banking

Abstract

Since the end of 1995 the central banks of the Group of Ten (G-10) countries have been studying the development of electronic money and the various policy issues which it raises. Much of this work has been carried out by the Committee on Payment and Settlement Systems (CPSS) or by monetary policy experts from G-10 central banks. Electronic money was discussed by BIS member central banks at meetings in Basle in July and September 1996. In August, the BIS published a report on the Security of Electronic Money prepared by the CPSS and the Group of Computer Experts. The BIS, through the secretariat services it provides for the various G-10 committees, has participated actively in the analysis of electronic money carried out by its member central banks. With their assistance it has also surveyed e-money developments globally. This short report, prepared by BIS staff, in particular Sean Craig, Robert Lindley and Paul Van den Bergh of the Monetary and Economic Department, provides a brief overview of the main policy issues that arise for central banks as a result of the development of electronic money. The views expressed in this report do not necessarily reflect the official views of the BIS or of its member central banks. The BIS, in cooperation with its member central banks, will continue to monitor closely the development of electronic money.